Bitcoin (BTC) Slump Spirals into $700M+ Liquidations, XRP, Dogecoin (DOGE) Products See Unusually High Losses

BTC fell under $100,000 in late U.S. hours before slightly recovering during early Asian hours Thursday, as the Federal Reserve hinted at a few rate cuts in 2025.

Bitcoin (BTC) dropped below the $100,000 level after the Federal Reserve announced a few rate cuts for 2025, while also revealing that it isn't permitted to own bitcoin under current regulations.

When asked about President-elect Donald Trump's promises regarding a strategic bitcoin reserve, Fed Chair Jerome Powell stated that the matter should be considered by Congress.

“We are not looking for a law change,” Powell added during the press conference.

During his campaign in July, Trump stated that the government would keep 100% of the bitcoin it currently holds or acquires in the future.

Bitcoin dropped 3% following Powell's comments, which also impacted other major cryptocurrencies.

XRP, dogecoin (DOGE) and Solana's SOL fell by up to 5.5%, while BNB Chain's BNB and ether (ETH) dropped 2.5%. Chainlink's LINK experienced the steepest decline with a 10% drop, partially reversing gains made earlier in the week when Trump-backed World Liberty Financial purchased $2 million worth of the tokens.

According to data, the market decline resulted in over $700 million in bullish bets being liquidated, with futures tracking smaller altcoins and meme tokens incurring greater losses than BTC or ETH futures in an unusual development.

When an exchange forcefully closes a trader's leveraged position because the trader failed to meet the margin requirements, a liquidation occurs. Large-scale liquidations can indicate market extremes, such as panic selling or buying.

A cascade of liquidations may suggest a market turning point, where a price reversal could be imminent due to an overreaction in market sentiment.

Some traders believe Powell's comment could indicate a local market top, dampening expectations of a sustained rally toward the end of the month.

“Crypto markets may have entered a peak if a U.S. Bitcoin strategic reserve is no longer in play, as this promise helped to fuel the recent months' rally to new all-time highs,” Nick Ruck, director at LVRG Research, told CoinDesk in a Telegram message.

“Although an interest rate cut would normally have a bullish reaction since it was largely expected, the market strongly reacted after Fed Chair Jerome Powell stated that inflation would be a continuing problem throughout the next year.”

Meanwhile, traders at Singapore-based QCP Capital remain largely bullish for the coming year.

“Don't get shaken out of your positions if a drop occurs,” the company stated in a Thursday broadcast message.

“With 2025 poised to be a potentially bullish year for crypto, especially with Trump in office, staying the course may prove beneficial.”